GROUP ACCOUNTING POLICIES (continued) 5. Insurance, investment and reinsurance contracts (continued) 5.1.4 Subsequent measurement Coverage units The number of coverage units is the quantity of services provided by the contracts in the Group, determined by considering for each contract the quantity of the benefits provided and its expected coverage period. The coverage units is reviewed and updated at each reporting date. The Group determines coverage units as follows: PPS Insurance Company non-participating portfolios Benefits Coverage units Business Provider Range of benefits including death disability, and critical illness under one contract. Weighted average discounted expected sum assured Legacy PPS Life and Disability Policy Death and disability benefits Legacy Health Preserver Critical illness benefits 5.1.5 Non-life insurance contracts measurement The non-life insurance contracts liabilities are measured using the PPA approach, these include measurement of the liability for incurred claims ("LIC) determined by discounting expected future cash flows at a risk-free rate, plus an illiquidity premium where applicable, and includes an explicit risk adjustment for non-financial risk. The liability includes the Group’s obligation to pay Unallocated Loss Adjustment Expenses (ULAE) incurred. For contracts measured under the PPA approach the Group elected to expense its insurance acquisition cash flows for its insurance product lines immediately upon payment being incurred. For reinsurance contracts held the Group applies the PAA to measure its reinsurance assets for a group of reinsurance contracts that it holds on the same basis as insurance contracts that it issues. The Health Professions Indemnity reinsurance held, group of contracts for a period of one year with risk attaching, resulting in a coverage period greater than one year. However, based on the eligibility assessment, there is no material difference in the measurement between PAA and the general model, therefore, these qualify for PAA. Under the PAA, the initial measurement of the asset for remaining coverage equals the reinsurance premium paid. The Group measures the amount relating to remaining service by allocating the premium paid over the coverage period of the group. For all reinsurance contracts held, the allocation is based on the passage of time. 5.1.6 Insurance revenue As the Group provides insurance contract services under the group of insurance contracts, it reduces the LRC and recognises insurance revenue. The amount of insurance revenue recognised in the reporting period depicts the transfer of promised services at an amount that reflects the portion of consideration that the Group expects to be entitled to in exchange for those services. 122 Group Accounting Policies
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